IMPACT OF COMMERCIAL BANK LOAN ON SMALL AND MEDIUM SCALE BUSINESS IN NIGERIA (2000-2023)
Abstract
Abstract
Small and medium-sized enterprises (SMEs) constitute a critical pillar of economic development and inclusive growth, especially in developing economies. The main objective of this study is to investigate the effect of commercial bank loan on small and medium scale business in Nigeria. Ex-post facto research design is employed, using annual data that spanned from 2000-2023. Based on the unit root test result, this study employes ARDL Model to analyze and interpret the hypotheses with the aid of E-View 12.0 statistical software. It is found that on the long run, Total Amount of Credits by Commercial Banks to SMEs has positive and significant effect on Commercial Banks Loan to SMEs as % Total Credit while Average Commercial Bank Lending Rate has positive and significant effect on Commercial Banks Loan to SMEs as % Total Credit. This study concludes that commercial bank loan significantly impacts small and medium scale business. Based on the findings and conclusion, this study recommends that Commercial banks should intensify their efforts to expand credit facilities specifically targeted at the SME sector. Government should introduce targeted interest rate subsidies or credit guarantee schemes that reduce the risk exposure of banks and make it financially viable for them to lend to SMEs at lower rates.
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